Travel within the U.S. appears to have lost some momentum, but the intent to travel internationally remains strong.
Americans’ intent to travel in the U.S., within the next six months, registered 42.5% in August versus 44.1% one year ago. The intent to travel within the U.S. in the next six months has trailed 2022 levels three out of four times this year. Intent to travel within the U.S. rose from 36.3% in June to 42.5% in August, but the increase reflected the typical seasonal pattern in the metric.
Conversely, the intent to travel outside the U.S. in the next six months is well above prior year levels. The measure reached 21.8% in August, more than 20% above the same time last year and the highest reading ever. For perspective, the measure was 13.7% in August 2019.
The Conference Board’s Consumer Confidence Index is reported monthly and is derived from an online survey of U.S. consumers. Every other month, the Conference Board includes a series of travel-related questions in the survey that provide a measure of consumer travel intentions.
The measures of intent to travel have correlated with travel trends in 2023. U.S. hotel demand was up 2% through August, but almost all of the growth in the first quarter was due to easy comparisons against the effects of the omicron variant in early 2022. Demand has been flat or below prior year levels from April through August, consistent with the lack of year-over-year growth in the measures of intent to travel domestically.
Meanwhile, international travel by U.S. residents is up about 30% year to date. Travel to many world regions including Europe, the Caribbean, South and Central America has surpassed pre-pandemic levels and is at all all-time highs. The U.S. National Travel & Tourism Office reported nearly 5.6 million Americans traveled overseas in June, the highest monthly volume ever.
Based on the latest measures of intent to travel, leisure destinations within the U.S. may experience little to no growth compared to prior-year levels, but the strong international travel that has prevailed all year is likely to continue.
The overall Consumer Confidence Index has also trailed prior-year levels for much of the year. The index improved markedly over the summer but has declined in back-to-back months and is below prior-year levels again.
Consumers’ assessment of current economic conditions was little changed in September, but their view of the short-term outlook weakened notably. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, was 147.1 in September versus 146.7 in August. The Expectations Index, which evaluates consumers’ short-term outlook for economic conditions and their income in the next six months, dipped from 83.3 in August to 73.7 in September. The metrics are indexed back to 1985. According to The Conference Board, an Expectations Index below 80 has historically signaled a recession within the next year.
Consumer confidence is widely viewed as a leading indicator of consumer spending, and the index will be watched closely in the coming months. Continued weakening could portend a slowdown in consumer spending late this year.